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Can Carbon Capture Clean Up Canada’s Oil Sands?

Alberta will serve as a test bed for large-scale carbon capture and sequestration.

Canada is betting that carbon capture and storage (CCS), a technology that is fairly well understood but unproven at the scale needed to significantly decrease greenhouse gas emissions, can reduce the environmental footprint associated with making fuel from oil sands—its fastest-growing source of greenhouse-gas emissions. (See “Alberta’s Oil Sands Heat Up.”)

Aerial view of Shell Scotford
Emission control: Aerial view of Shell Scotford, an oil sands refinery near Edmonton, Alberta, Canada. Shell’s Quest project will capture and store more than one million tons of carbon dioxide a year from Scotford beginning in 2015.

If things go as planned, the country’s CCS effort will not only result in emissions cuts, which would start out small in 2015 and then grow into much larger ones over the coming decades—it will also be a first test of the type of large network of pipelines, capture facilities, and storage reservoirs that will be required for CCS to play a significant role in reducing emissions. That knowledge gained, say proponents in industry and government, will be valuable not just to Canada, and could help the CCS industry finally get off the ground.

Deployment of carbon capture technology has been held back by high costs, uncertainty about risk, and the lack of incentives for large emitters around the world to invest in the technology. CCS has not yet been deployed at a commercial-scale power plant, much less at the scale required to play any kind of significant role in a country or region’s long-term emissions strategy. The International Energy Agency has said that the construction of large CCS facilities is far behind schedule if the technology is to play a substantial role in helping the world meet important reduction goals over the next several decades (see “The Carbon Capture Conundrum”).

Alberta, which contains the vast Athabasca oil sands deposits, has committed over $1.2 billion to two world-class CCS projects meant to capture, transport, and store carbon dioxide usually emitted during the oil sands production process. One project will be at a large processing facility run by Shell, and another will connect multiple capture sites to operations that will use the captured carbon dioxide to recover hard-to-reach oil, a process called enhanced oil recovery.

Each of the projects, which are also supported by Canada’s federal government, will capture carbon dioxide from so-called “upgraders,” the facilities that convert the bitumen extracted from the oil sands into synthetic crude oil for transport in a pipeline. Upgraders account for roughly half the emissions associated with oil sands production, says Eric Benyon, director of strategy and policy at ICO2N, a group of oil companies and power producers in western Canada committed to developing CCS.

It costs less to implement CCS at upgraders compared to other points along the production process. In the future, though, Benyon expects that “as the technology improves and the costs come down,” the industry will aim to capture carbon from certain extraction sites as well.

Shell’s project, called Quest, will be one of the largest and most advanced demonstrations yet of permanent carbon storage in a deep saline aquifer—the type of porous, salt-water-filled underground rock formation many experts consider promising for the storage of massive amounts of carbon dioxide all over the world. The objective of the project, which has been in the works since 2006, is to capture 35 percent of the emissions, or 1.2 million metric tons annually from the company’s large upgrader at its Scotford refinery. It is slated to operate for for 25 years, beginning in late 2015.

The other project, dubbed the Alberta Carbon Trunk Line, is led by two Canadian companies, and will connect an oil sands upgrader and a fertilizer plant with enhanced oil recovery operations. It’s supposed to begin storing up to 1.8 million metric tons annually in 2015. Down the road, the plan is for this 240-kilometer pipeline to be able transport and store nearly 15 million metric tons per year.

Oil sands production is fairly greenhouse-gas intensive, emitting between three and 4.5 times more carbon dioxide per barrel than does the production of crude from conventional sources in the U.S. or Canada. The industry is currently responsible for between 40 and 50 million metric tons of carbon dioxide every year, or around 7 percent of the nation’s total emissions. “When you look at the makeup of this province’s emissions, CCS is a key technology,” says Mike Fernandez, executive director of sustainable energy for Alberta’s energy ministry. Fernandez says the goal is to be injecting and storing 2.76 megatons by late 2015, and 139 megatons by 2050.

Alberta’s projects are “very important” because, if successful, they will remove “first mover costs,” and the experience gained through them should drive down CCS costs generally, says Howard Herzog, a senior research engineer in the MIT Energy Initiative. “Essentially, they are pioneers.”

Ultimately, though, if CCS is going to really take off, it will need much stronger policy incentives. Alberta’s current policy is that high emitters unable to reduce their emissions by 12 percent must pay $15 per ton of carbon dioxide emitted. But that price is too low to make much of a difference as far as CCS is concerned, says Fernandez. “The reality is, there’s a price of carbon disconnect.” Fernandez says the provincial government is considering renewing its climate policy, which may include an increase in the carbon price.

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